I speak to farmers every day, and there is a real mix of who and what enterprises have been affected by the virus.
Those who have diversified into tourism and leisure have been badly impacted and the traditional farming enterprises less so. When I speak to my fellow partners who deal with non-farming businesses, the implications of the lockdown have been huge for commercial business and the hangover will last for some years to come.
For rural businesses the biggest concern is whether the UK Government can agree a Brexit deal with the EU before the end of 2020 – in time to prevent leaving with no deal or tariffs.
There are so many variables right now and uncertainty is the biggest issue. Whatever outcomes the next few months bring, businesses will adapt and be in a better position to make plans once it’s known what the goalposts are.
In spite of uncertainties, we are still seeing some businesses take opportunities.
There is still an appetite to lend to the agricultural sector at competitive rates, allowing some businesses to expand and others to exit.
The Scottish Government announced last week its 2020-21 £160 million fund for forestry and agriculture. The bulk of this is being directed to forestry, but there is £10m being allocated to a new Sustainable Agricultural Capital Grant Scheme.
It is interesting to read all the speculation about the upcoming Autumn Budget.
When there is a large contraction in the economy and corresponding increase in public spending, it means there is a substantial rise in the state’s share of the economy. Therefore it is easy to see why the chancellor is looking at taxation. It is not so easy to second guess what tax changes will be made.
Capital gains tax rates seems to be on the hit list, but this will only be a concern if you are planning to sell. Indeed, if there is an asset in the process of being sold it may be better to complete the deal before the budget in November.
Higher-rate tax relief on pensions regularly gets mentioned, and therefore if contributions are being considered, making them before the budget would make sense. It seems a given that national insurance rates will rise for sole traders and partners, to equalise the rates paid by employees – this was stated at the time the coronavirus grants and funding were announced.
There is a myriad of possibilities including reform to inheritance tax, or perhaps some other form of taxation a bit less mainstream.
It is one thing setting higher taxes, but quite another achieving higher tax revenues in a recession.
One thing is sure, it will be the wealthy asked to shoulder a heavier burden come November’s budget.
Time will tell what the definition of wealthy is but given the government’s previous pledge not to increase income tax, we need to remain alert to capital tax changes and potential impact on farmers and landowners.
Ian Craig is a partner with Azets, formerly Campbell Dallas.